Correlation Between Lotte Data and Korea Air
Can any of the company-specific risk be diversified away by investing in both Lotte Data and Korea Air at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lotte Data and Korea Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotte Data Communication and Korea Air Svc, you can compare the effects of market volatilities on Lotte Data and Korea Air and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lotte Data with a short position of Korea Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and Korea Air.
Diversification Opportunities for Lotte Data and Korea Air
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lotte and Korea is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and Korea Air Svc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Air Svc and Lotte Data is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lotte Data Communication are associated (or correlated) with Korea Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Air Svc has no effect on the direction of Lotte Data i.e., Lotte Data and Korea Air go up and down completely randomly.
Pair Corralation between Lotte Data and Korea Air
Assuming the 90 days trading horizon Lotte Data Communication is expected to generate 0.86 times more return on investment than Korea Air. However, Lotte Data Communication is 1.16 times less risky than Korea Air. It trades about 0.01 of its potential returns per unit of risk. Korea Air Svc is currently generating about -0.02 per unit of risk. If you would invest 1,990,000 in Lotte Data Communication on October 30, 2024 and sell it today you would lose (8,000) from holding Lotte Data Communication or give up 0.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. Korea Air Svc
Performance |
| Timeline |
| Lotte Data Communication |
| Korea Air Svc |
Lotte Data and Korea Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and Korea Air
The main advantage of trading using opposite Lotte Data and Korea Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, Korea Air can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Korea Air will offset losses from the drop in Korea Air's long position.| Lotte Data vs. Daiyang Metal Co | Lotte Data vs. CKH Food Health | Lotte Data vs. Seoyon Topmetal Co | Lotte Data vs. Korea Industrial Co |
| Korea Air vs. Wireless Power Amplifier | Korea Air vs. Cloud Air CoLtd | Korea Air vs. Korean Reinsurance Co | Korea Air vs. Dongbu Insurance Co |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |